Utah residential customers could see their natural gas bills rise $3 to $7 a year under a proposal to subsidize rural communities that yearn for natural gas service.
These towns, including Kanab, Green River and Garden City, lack the customer base to justify construction of pipelines, which cost up to $1 million a mile, so the idea behind HB422, sponsored by Rep. Mike Noel is to tap existing customers to help foot the bill, Dominion Energy executives told lawmakers Thursday.
“We are growing with a whole bunch of tourists and, in my town, dogs,” Noel, R-Kanab, told colleagues Thursday, referring to Kanab’s largest employer, Best Friends Animal Society.
“Every time we try to get a new type of business, the first thing they ask is if we have natural gas. It’s much less expensive, it’s a nicer heat,” Noel said before the House Public Utilities, Energy, and Technology Committee.
But extending gas mains is not feasible unless existing ratepayers help cover costs, Noel said, arguing it is in the best interests of Utah to expand gas service to remote areas that currently rely on propane and electricity for heat.
“To run a $30 million line to Green River with 300 customers, economically they would never be able to pay for it,” said Kelly Mendenhall, Dominion’s director of regulatory affairs. His company serves 1 million customers in 280 Utah cities, mostly clustered along the Wasatch Front.
HB422 allows the Public Service Commission to pass such costs to all Dominion ratepayers, but limits the amount to 2 percent of the company’s overall revenues in any one year during a rolling three-year period, and caps it at 5 percent. That translates to a maximum of $170 million, but that limit would rise with Dominion’s increase in revenues.
“This is a balance of being able to expand service while being sensitive to the impacts to our general customer base,” Mendenhall said.
Committee members advanced the bill on a unanimous vote. It now moves to the full House.
The bill was initially opposed by ratepayer organizations — namely the Utah Office of Consumer Services and the Utah Association of Energy Users, representing the state’s 35 largest industrial customers. But the groups withdrew their opposition after the limits were added to the bill.
Rep. Patrice Arent, D-Millcreek, said measure also would help address the lack of affordable housing.
“This is a serious problem in rural Utah,” Arent said. “We have many people who want to work there but can’t find a place to live, and I think this will help with that aspect of development of our rural communities.”